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Big CPI Report and Ongoing Earnings – 3 Things To Watch For Thursday


By Daniel Shvartsman – Correction? What correction? Markets appear to have found their bullish groove again, with Wednesday’s trading seeing the Nasdaq lead the way in U.S. markets, climbing more than 2%. The tech-driven index is now more than 8% above its late January bottom, even as the United States 10-Year Treasury approaches 2% itself.

There’s been one persistent threat to markets though, and that threat takes center stage on Thursday. Beyond the headline inflation report due out tomorrow morning, a full slate of earnings will offer plenty of individual company and sector catalysts.

Here’s what to watch in Thursday’s market.

1. CPI Report

The CPI and Core CPI Report will come out pre-market and is expected to place pressure on the Fed, policymakers, and the market. Economists expect CPI and Core CPI to come in at .5% month over month; Core CPI (excluding energy and food prices) is expected to be 5.9% year over year, and CPI is expected to be 7.3% year over year. The latter would be the highest number since 1982.

Of course, expectations have a way of getting priced in; both rising yields and rate hike expectations suggest that the market anticipates a big number and subsequent Fed action in March. Perhaps the biggest question is whether this CPI number will be enough to nudge the Fed towards a 50 basis points hike when they next meet. And if so, can tech stocks and long duration assets hold up in the short term?

2. Coca Cola and Pepsi earnings

The two beverage giants report earnings before the bell. In what has been a more defensive market climate, the two staples have outperformed indices year to date. PepsiCo Inc (NASDAQ:PEP) is expected to show 7.8% revenue growth and 3.4% earnings growth, while Coca-Cola Co (NYSE:KO) is expected to post 4.5% revenue growth and a 12.7% drop in earnings per share. Beyond the specific numbers, the two rivals should be able to provide insights on commodity price inflation and what pricing looks like for consumers.

3. Cloudflare  and Affirm earnings

Several tech companies report tomorrow, and none have had flashier ups and downs than Cloudflare (NYSE:NET) and Affirm Holdings (NASDAQ:AFRM). Cloudflare, a cloud platform and services provider, is expected to post 47% revenue growth and come just shy of break-even on the earnings front. Affirm is expected to post 61% revenue growth while still showing losses on the net income front. The buy-now/pay-later fintech company is nearly 60% off of its highs set just last November, and whether enough of a slowdown has been priced in or whether they can change the market’s mind on their own with their performance is to be seen.

The same goes for Cloudflare, which is down only 48% from its 52-week highs from November; today’s Twilio (NYSE:TWLO) report is a sign of how the market can get offsides even as the broader narrative has shifted. Will these companies benefit from the same lowered expectations?


Big CPI Report and Ongoing Earnings – 3 Things To Watch For Thursday

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